The news that Her Majesty’s Treasury (HMT) are already finalising plans to extend off-payroll rules to the private sector has been met by consternation by the recruitment industry. Reported by the BBC it appears that the changes will demand “that firms which use personal service company contractors take legal responsibility for ensuring "off-payroll" contractors stick to the tax rules known as IR35.”
Tania Bowers, General Counsel at APSCo commented: “We are extremely disappointed that HMT appear determined to discount the advice of APSCo, and every other influential body, and charge ahead with these changes providing no time for business to adapt. Mel Stride MP, at a meeting attended with APSCo, indicated he was taking the needs and concerns of business seriously. It’s worrying if these concerns have subsequently been disregarded by HMT.
She continues: “Like the Confederation of British Industry (CBI) and The Association of Independent Professionals and the Self-Employed (IPSE), we maintain that these proposals will have an adverse impact on the strength of the UK’s labour market and wider economy at a critical time.”
Bowers notes there is as yet no indication that any changes will take effect in April 2019 but says that the fact that the announcement is likely to be included in the upcoming Budget means that this could well be HMT’s intention.
“There is almost universal agreement that the CEST tool, in its current format, is inaccurate and not fit for purpose,” she adds. “We at APSCo maintain that it is crucial that implementation is delayed for at least 12 months after the publication of the final legislation so ‘success’ of the public sector roll-out can be assessed and businesses have enough time to react to the changes.
Julia Kermode, chief executive of FCSA questions whether the information and feedback collected concerning the move can have been processed by those creating the legislation: “HMRC cannot have properly considered the huge number of consultation responses it received to make any informed decisions about Off-Payroll in the run up to this month’s budget so it is a bold prediction by the BBC,” she notes.
Kermode also questions the figures the move is based on, adding: “It is incredibly frustrating that policymakers justify their decisions on figures that are shaky at best, without properly considering the detail behind those figures, let alone the devastating impact on the UK economy.”
IPSE, the Association of Independent Professionals and the Self Employed, has also responded to the report. “Just two weeks ago, the Chancellor stood before the nation and declared the Conservatives ‘have business at its core’ and today we learn, through the media, that he is considering rolling out changes to off-payroll rules which will lay a heavy burden on business,” said IPSE’s deputy director of policy, Andy Chamberlain. “Business groups have been unanimous in their view, they will not be ready to implement these complex changes by April 2019. If the Chancellor does push ahead with this, he will be flying in the face of the very businesses he pledged to support less than two weeks ago at the Conservative Party conference.
“IR35 is an extraordinarily myopic policy – it is a short-sighted tax grab that will cause untold economic damage in the long-term,” he continued. “It has already wreaked havoc in the public sector, with project delays and skills shortages.”
ISPE’s view is that the Government is justifying the move it with “spurious figures about the amount of tax these measures will bring in”. It is also concerned that with Brexit on the horizon, the changes could not come at a worse time.
“The UK is staring into a Brexit-shaped abyss, yet the government wants to introduce a measure which will damage the country’s greatest competitive advantage – our flexible economy,” concludes Chamberlain.